Ample scope for Islamic banking in India: Mufti Barkatullah

“There are positive signs of interest-free banking starting in real earnest in India. The world is getting fed up of the interest-based transactions and the deep recession that made the economy go into a tailspin. In India there is ample scope for Islamic banking as an alternative system that is not affected by the recession,” opined Mufti Barkatullah Qasmi, Judge at the Islamic Shariah Council, London.

He was addressing a conference on “Islamic Banking in the Light of Qur’an and Sunnah” held at Markazul Ma’arif Education and Research Centre (MMERC) in Mumbai on 10th January, 2010.

Mufti Barkatullah Qasmi, who is also Shariah Supervisor at Islamic Bank Britain, has come from UK especially to offer advice to financial institutions in India on Shariah compliant banking.

He revealed that the different kinds of forms that are now used for financial transactions in the world were first mentioned in the Qur’an over 1400 years ago. These were mentioned in the surah Al-Baqra and ‘it was enjoined upon Muslims to write down whenever they made a transaction’.

He said that in present condition when Interest-free banking is a worldwide trend with over 500 Islamic banking institutions and 400 Islamic funds operating in nearly 70 countries, it is right time to introduce Islamic banking institutions in India too.

“Ethical financing has come to the fore in the current recession. On all the three levels of customer, manager and investor, Muslims are taking part in Islamic interest-free banking. The unique features of such institutions shield them from the effects of the recession and some of them have outperformed the listed equities. Some aspects in the modern economy are kept secret and the giving or taking of interest has been termed as oppression in Islam. As opposed to this, the Islamic system of economy offers complete transparency, agreement between the parties, ethical dealing, satisfaction with the business engagement and complete clarity on the issues involved” he added.

Giving reference from the Qur’an, Mufti Barkatullah said that when someone makes a deal Allah Himself oversees the deal and is a party to it and His presence remains until the deals are based on transparency, trust and justice.

About Takafful insurance which has taken root in some Gulf countries he said that Islam is not against insurance as such but only against the wrong means adopted to secure it.

Talking about investing in the share market, he said “Islam does not allow short selling. This is trying to make a deal when the actual goods are not with you. After the financial crisis some countries have banned short selling which goes to show that Islam’s golden principles are favorable for business transactions and the world is slowly coming to realize their importance and necessity” he added.

“In those countries where Islamic interest-free banking is in operation, businessmen and customers from other communities constitute 40 per cent of the clientele” he revealed.

Ha also made it clear that Islam focuses on justice and transparency. According to Islamic fiqh, there should be an equal partnership in loss or gain, while dealing with interest in any situation is oppression. It is unjust to say to someone whom you are lending money that whether he earns a profit or not he has to pay a fixed return in the form of interest.

“Islamic finance would not only give a general fillip to economy but on the secondary level Muslims would also stand to benefit. Some foreign firms have invested about Rs 600 crore in the new airport coming up near Panvel, Mumbai on the basis of an equal share in profit and loss, which goes to show that Islamic banking concepts are slowly making their presence felt in India” he informed.

Speaking on the occasion, Mr Gaffar Shaikh, Managing Director of the Maulana Azad Minorities Financial Development Corporation, dwelt on the abysmal economic condition of the Muslims and gave some examples to show how the community is engaged in petty businesses and far behind the other communities who are progressing from small cap to mid-cap industries and from SEEPZ to Special Economic Zones.

“There are only two respectable options open to us; either to go for large businesses or to go for government jobs but unfortunately on both fronts our condition is very poor for which we ourselves are as much responsible as government is” he said.

Lamenting over lack of awareness among the Muslims community about both central and state welfare schemes for the minorities and those living below the poverty line, he said that according to government figures about 30 per cent of Muslims live below the poverty line but due to various reasons they are unable to take advantage of government schemes meant for the poor.

He also said that the way of routing welfare schemes for the poor has changed dramatically in the last 25 years. Now most international schemes, central schemes and state schemes are routed through NGOs and the problem with Muslims is that there are not many NGOs working exclusively for them.

He urged the community to take advantage of all government welfare schemes especially those meant for the poor and the downtrodden people.

Earlier, Maulana Burhanuddin Qasmi, director of MMERC introduced the two speakers to the audience. “This is the second in a series of programs to make the community aware about the importance of the economy because participation in the growth of the economy would definitely contribute to the success of Muslims” he said.